Tag: Hurricane Maria

Hurricane Maria

Puerto Rico’s Commissioner of Insurance Fines Insurance Companies For Unnecessary Delays After Hurricane Maria

For the island of Puerto Rico, recovering after Hurricane Maria has been incredibly difficult. In the six months since the hurricane ravaged the island, millions of Puerto Ricans have struggled to rebuild among an island-wide power outage, scarcity of clean drinking water, and slow response from insurance companies. However, Puerto Rico’s Commissioner of Insurance has made it clear that insurance companies will not be able to shirk their duties.

Last month, Commissioner of Insurance Javier Rivera issued a whopping 2,587 violation orders to six different insurers. Under Puerto Rican law, insurers are expected to handle claims promptly and in good faith. If a policyholder in Puerto Rico does not agree with an insurance company’s determination of their claim, they can request an investigation by the Commissioner of Insurance. These investigations have already illustrated a widespread issue of unfair dealings on behalf of the insurance companies.

To address this dishonest behavior, the violation orders also assessed fines to the insurers. The Commissioner of Insurance has issued over $2 million in fines to insurers for unnecessarily delaying processing Hurricane Maria claims.

Insurers Acting In Bad Faith

Insurance companies are first and foremost businesses. So when natural disasters occur, insurance companies face millions of dollars in claims payouts. Most companies are not in a rush to pay out, and in fact many will use bad faith tactics to limit or completely deny payouts. Insurance companies try to limit payouts to save on their bottom lines, but this is not just morally wrong – it is also illegal. Policyholders that pay their premiums regularly deserve full coverage under their policies delivered in a reasonable timeframe.

Know Your Rights After Hurricane Maria

Even under the best circumstances, rebuilding after a natural disaster is challenging. After Hurricane Maria, property owners faced substantial hurdles from the lack of electricity and damage to the island’s highways. Many property owners are still facing significant issues, but dishonest insurance companies shouldn’t be one. Puerto Rico’s Insurance Code provides numerous protections for policyholders, but insurance companies often count on policyholders being unaware of their rights. In Puerto Rico, insurers are expected to resolve claims in a 90-day claims window unless there are extenuating circumstances. Failing to meet his deadline can result in fines like the ones issued by the Commissioner of Insurance.

Business Interruption Claims

Business Interruption Claims After Hurricane Maria

After any natural disaster, businesses don’t just face property damage; they also suffer economic damages from lost business. It can take a long time for businesses to resume operations after a natural disaster, and in the case of Hurricane Maria, many Puerto Rican businesses are still not operating. To help protect against these financial losses that come after natural disasters, many policyholders choose to purchase business interruption insurance.

What Is Business Interruption Insurance?

Business interruption insurance (also called business income insurance) is a type of insurance coverage that compensates the policyholder for the loss of income a business suffers after a disaster such as a fire, hailstorm, or hurricane. This coverage can cover income lost while the business was closed during a natural disaster and while the business is closed for rebuilding and repairing property damage from the disaster.

How Is Business Interruption Insurance Calculated?

When a policyholder files a business interruption claim, a thorough investigation should take place to properly calculate all of the losses endured by the business. The investigation will include an examination of financial statements such as a profit and loss report, along with the business’s history, and the number of employees, among other things. The insurance company will estimate the profits that would have been earned had the business been open based on the business’s history and other factors. The insurance company will then total and estimate the expenses a business regularly incurs, and the expenses the business incurs as a result of its closure such as moving to a temporary location. These totaled amounts should then be paid out to the policyholder to cover the entire financial loss due to the business’s closure.

Business Interruption Claims From Hurricane Maria Will Be Complex

Because Hurricane Maria destroyed the Puerto Rico’s electrical grid, downed most of the communication systems, and damaged many of the island’s highways, businesses were unable to rebuild and reopen for many months – some still remain inoperable. The losses from business interruption could be in the millions for insurance companies, and they will do everything in their power to limit claim payouts. Insurance companies often underestimate the cost of different expenses in order to help minimize claims.

Insurance companies have already faced extensive fines from the Commissioner of Insurance of Puerto Rico for unnecessarily delaying claims, but it is likely they will continue to drag their feet in paying out Hurricane Maria claims.